World Cocoa Foundation delivers new cocoa farmer income measurement system
An enhanced system of measuring cocoa household incomes has been devised by the World Cocoa Foundation (WCF) alongside key industry stakeholders, as the organisation moves to enable additional support for key producing communities, writes Neill Barston.
In February, the WCF, which includes a broad membership across the sector including the largest groups in the sector, including Cargill, Barry Callebaut, Blommer Chocolate, Buhler, Ferrero and Hershey, held its latest partnership meeting.
This engaged with core issues facing the industry, including the upcoming EUDR regulations on human rights due diligence in supply chains and the environment, as well as enabling farmers to gain a living wage.
The latter point came as cocoa prices continued to spiral upwards, this month reaching the $10,000 a tonne point, leading many observers to note a point of crisis had been reached with consecutive years of supply deficit in Ivory Coast and Ghana, as well as disease and weather impacted crops delivering reduced yields.
A significant step forward was achieved earlier this week, as it was confirmed that farmer income in Ivory Coast would be raised by 50% for the next due crops, taking it to $2.47 a kg, which is still significantly short of rates that have been gained on commercial commodities Futures trading platforms in New York and London, but has been welcomed by the sector. It is hoped that Ghana, which has closely aligned its cocoa strategy with Ivory Coast will also raise farmer pay rates, though this has yet to be confirmed.
On the overall issue of farmer income, the WCF has developed the methodology, funding it along with the German Federal Ministry for Economic Cooperation and Development (BMZ) in collaboration with the German Development Cooperation (GIZ) and the Swiss Platform for Sustainable Cocoa (SWISSCO).
As the organisation noted, it was delivered by Wageningen University & Research (WUR) and the Royal Tropical Institute (KIT) with assistance in Côte d’Ivoire from the Centre Ivoirien de Recherches Economiques et Sociales (CIRES) and Etudes de Marché et Conseils (EMC)
Significantly, as the WCF asserted, means of measuring additional farmer income had not been standardised in the sector, yet as it noted, accurately measuring cocoa farmer household income is key to understanding the impact of sustainability interventions on cocoa farmer households and the environment.
According to the cocoa body, ‘Existing methods struggle to account for the costs of cocoa production and to capture non-cocoa income,’ while data gathered by individual companies offers a picture based solely on their direct supply chains – leaving cocoa growers in the indirect supply chain underrepresented. Individual data gathering by companies and other institutions also currently relies on a variety of different methods.
Revising data collection
This new methodology, developed over several months of research, has been designed to help solve many of these challenges and offers a standard that can be applied to all future studies, research and data collection to make them more widely comparable and better representative of the sector as a whole. It includes groups that have not been intensively involved in sustainability interventions in the past as well as underrepresented groups such as sharecroppers, women and cocoa farmers in the indirect supply chain.
It also includes robust means of collecting data on diversified household income that does not stem from cocoa. The methodology was completed with inputs from numerous stakeholders across the cocoa sector including the Alliance on Living Income in Cocoa (ALICO), Living Income Community of Practice (LICOP), representatives from producing country governments,
NGOs and civil society organisations and WCF member companies. It is designed to determine the living income status of cocoa farming households and the impact of sustainability interventions on household incomes. These two elements are essential to defining and aligning stakeholders’ efforts around the interventions that are most effective.
“To understand what works in helping raise cocoa farmers’ incomes we first need to be able to consistently measure how activities affect those incomes,” said Michael Matarasso, WCF Director of Monitoring and Evaluation. “This methodology gives everyone in the sector a firm foundation to stand on and will help us to drive collective progress to improve cocoa farmers’ incomes.”
As the second phase of this collaboration, WCF, GIZ and SWISSCO will use this methodology to conduct baseline studies on cocoa farmer household income in three landscapes in Côte d’Ivoire. WCF will implement an income study in the Yapo Abbé Forest, GIZ in Bossématié whilst SWISSCO plans to deliver a cocoa household income study in the Cavally Forest Reserve in having recently completed an income study in Ghana aligned with this new measurement methodology. Similarly, other academic institutions, companies and government agencies can use the methodology in their own research and data collection, reinforcing a common standard for the entire industry.
“This methodology is important as it enables evidence-based policy and intervention design based on the analysis of good quality data for different household groups. We hope that it contributes to greatly reducing or closing the living income gaps of farming households,” said Yuca Waarts, Senior Researcher at Wageningen University & Research.
Lisa Kirfel-Rühle, overseeing cocoa supply chains at BMZ, emphasises the significance of the methodology, stating: “Through this methodology, we and our partners advocate for standardized high-quality income data of cocoa farmers to strengthen political discourse, whether past interventions have been sufficient to ensure decent incomes for cocoa farmers in Côte d’Ivoire or whether we still have to address imbalances in value chain distributions.”
“Helping cocoa farmers succeed requires everyone in the cocoa sector to work together. Therefore, having a common methodology to measure and compare the income of cocoa farmer families is important to accurately understand their economic situation,” said Nicoletta Lumaldo, Manager Innovation and Member Engagement at SWISSCO.